FAQs
The financial sustainability review identified that a shortfall in maintenance existed, but did not quantify how much or how to deal with it. Council has added additional funding to cater for the renewal of buildings not allowed for in the financial sustainability review.
The review also recommended Council take action on service reviews that called for increased resources that are needed to undertake better asset management. Funding for that has been included.
Upskilling our employees was identified as an important aspect of any successful change. Some funding has been allowed for employee training.
The factors, such as forecast inflation have significantly changed from those used in the AEC projections. The latest information from the Federal Government have been used and that worsens the gap between revenue and expenditure.
What is the difference between Option 1 and Option 2?
Option 1 and 2 result in the same increase. Option 1 reflects a significant increase in year 1, with subsequent years rates subject to the Rate PEG. Option 2 (spread over 5 years) commits Council to a maximum percentage per year that includes the Rate PEG. The resultant income over time is arrived at in slightly different ways.
Why do we have to rank the options in order of preference?
This is similar to preferential voting and it is important for Council to understand the community's preferences.
If approved, when would the Special Rates Variation (SRV) start to take effect? When will it end?
Following the community engagement period, Council will meet again in January 2023 to consider feedback and determine whether or not to proceed with an application to IPART in February 2023. If an application is lodged and approved the change in your rates would commence from the first payment of the new financial year. Once the specified increase is fully in place it is permanent.
What if I am going through financial hardship?
If you are concerned about the financial impact of a rate increase, we have a Financial Hardship Policy to assist ratepayers ( https://www.snowymonaro.nsw.gov.au/files/assets/public/council/policies/250.2019.512.1-policy-financial-hardship-and-assistance-policy_202005271439015269.pdf). Eligible Pensioner and Concession card holders will continue to receive rebates.
How does The Independent Pricing and Regulatory Tribunal of NSW (IPART) assess the application for a Special Rates Variation (SRV) for the Snowy Monaro Regional Council?
IPART may consider the following (including but not limited to):
• Size and resources of the council;
• Size (% and $) of the increase requested;
• Purpose of the Special Rate Variation;
• Current rate levels and any previous rate rises;
• compliance with the applicable guidelines;
• any other matter IPART deems relevant including community submissions.
Is Snowy Monaro Regional Council the only Council applying for an SRV?
No, there are at least 15 other NSW Council’s intending to apply for an SRV in 2023. The increase in rate increases requested by other councils varies from 5%-86%. This reflects that 78 of the 128 NSW councils reported operating deficits in their general fund in 2020-2021.
Doesn’t my land value increase every three years and therefore increases my rates too?
The overall amount Council can raise only increases by the rate peg amount, not land values. But not all parcels of land change value by the same amount. So if your land value increases more than average you will get a rate increase higher than the rate peg. If it increases less than average you will have an increase less than the rate peg.
The percentage your land value increases does not necessarily lead to a similar percentage increase in your rates. The Valuer General (https://www.valuergeneral.nsw.gov.au/about_us ) supplies land values to Council’s to use in the calculation of rates. The regular issue of land values ensures changes in the local property market are reflected in the Council’s rates model.
If there is a rate rise, how will I know when Council has spent this money?
If IPART grants the SRV, Council will provide quarterly updates on our website and through our reports to Council and the community.
I rent, so I do not pay rates directly, but I live in the Snowy Monaro Regional Council area, will this affect me?
Council rates are paid by property owners. However higher rates form part of costs which non-rate payers may bear, including tenants currently paying rent in the region and the cost of goods and services through businesses. Infrastructure, facilities, and services are provided for all residents of, and visitors to, the region.
There are lots of grants available, why can't we just seek more grant funding?
Many grants require funds to be spent on capital expenditure (eg. sporting fields, new community facilities) and are not used to fund the day-to-day operations of Council. Snowy Monaro Regional Council applies for and receives government grants and will continue to do this in the future. Council cannot solely rely on this form of income; in most instances grants require a co-contribution from Council, grants are extremely competitive, and we may not be successful, grant programs have requirements attached to them which may not be in line with Council’s strategies and plans.
If the population increases the rates increase, don't they?
Increased population often also means increased need for, and faster use of, infrastructure. So the outcome will depend on how the population is housed. If you get more people living in apartments or dual occupancies there may be no additional rates, but more demand for parks and sport fields. More urban blocks bring more roads as well as more rates. People scattered throughout rural areas increases the wear and tear on roads and demand for better service levels.
It is true that the higher the density of people the lower the cost of servicing, but the rates first have to be at the right level, so that the costs of servicing those people is being raised. Otherwise you just increase the overall burden.
Council's total rate income is capped by the state government. Snowy Monaro Regional Council can only increase our total rates income above the rate peg if we seek a Special Rate Variation. The increase in development and therefore population, is not matched by a corresponding increase in rates. By contrast additional stamp duty revenue (not capped) is not shared with local government by the state. This means that as the population continues to grow, requiring and placing more demand on our services and facilities, there is no extra income for Council.
When you developed the Community Strategic Plan, did you limit big idea thinking to what Council could afford?
The Community Strategic Plan reflected what the community was telling us. There are a number of things that the community wants that are not funded under the current proposal in the long term financial plan. When Council has looked at what it is proposing we have looked to only fund keeping the existing infrastructure and services, because that in itself needs a large increase in funding. If the community is willing to invest in additional services the Council can move into those areas. But this would have to be either in addition to the efficient cost of providing the current services or by accepting some current services being dropped.
Strategy should lead the budget to allow for improvements and growth. It is important to plan for the future community aspirations for the region.
What is a rate peg?
Under NSW legislation the overall amount of money raised by rates can only increase by no more than a set percentage determined by the Independent Pricing and Regulatory Tribunal (IPART), unless special approval is gained. The amount calculated by IPART is what is known as the rate peg.
Is the Council saying it is efficient and cannot save any money?
The financial sustainability review has 24 recommendations, a number of those with multiple parts. Most of those are about making changes to be more efficient. The problem we face is that the overall amount needed to efficiently provide services is higher than the amount of funds available. So we have to invest more as well as spend every cent wisely.
Why are our rates going up, aren't they already high?
Overall we have a lot more road per landholding than most areas as well as more facilities such as pools, halls and libraries. They all have a cost and having to share it over fewer people makes it relatively expensive. Despite this Snowy Monaro Regional Council has one of the lowest average rates compared with similar councils. Here is our average residential rates and other charges compared to other regional councils.
Why won’t Council do an audit?
We get audited every year. We also have an internal audit system that reviews our operations. In addition Council engaged an independent organisation to look at the Council’s financial position, both past and present, to tell us what the situation is (Financial Sustainability Review). The Office of Local Government is also closely monitoring our situation.
The Financial Sustainability Review has confirmed that there is a long term structural financial issue. We have been told that the issues we are facing are the same issues similar councils are facing – that is, we are not unique in the difficulties we face. We have been told that for a long time the Council has not been investing enough into the community’s infrastructure to replace what we are using up, creating a bigger and bigger burden on future generations.
The NSW Auditor General, NSW Office of Local Government and AEC Group have all said there is a significant financial issue and Council needs to start making hard decisions to fix the situation, which is what is being done.
Why is the rate increase proposed by Council different to what was in the financial sustainability review?
Once we understood the direction that the financial sustainability review was heading Council started doing further work to review our long term financial plan based on what the AEC Group had developed to support their findings. A number of things are different in the Council’s long term financial plan:
How come this is such an urgent problem now? Why can’t we put it off?
Prior to merger the three previous councils all identified that to be financially sustainable they needed to increase rates. Following the merger the newly formed council identified that they needed to increase rates or they would run out of cash. Council was not allowed to increase rates due to legislation preventing merged councils from changing their rate income levels. When that period finished the community was coming off the back of the Black Summer fires and being impacted by COVID.
There will never be a good time for increasing investment into our community infrastructure and services. Every year it is delayed increases the funding gap, increases the deterioration in the roads, buildings and other infrastructure and ultimately increases the costs to landowner. Under investment in infrastructure leads to it costing 3.5 times more to maintain everything and 5 times more the cost of preventative maintenance when things breakdown. We already have over $100million in assets that should be brought back up to a reasonable condition. Every year the gap will widen and need more funds to bridge that gap.
Why can’t we simply cut costs and not have a rate increase?
There is a certain cost to own or run things. If you spend less than that eventually it catches up on you, which is the situation Council is now in. There is a difference between cutting costs and being efficient. We have to be realistic and that means we cannot pretend that it is possible to provide all this infrastructure without the necessary investment. We are looking to operate efficiently and effectively so that we can provide the infrastructure and services the community is willing to fund, but the community has to be willing to fund the reasonable cost of those services.
How did you come up with a figure?
The financial sustainability review identified what they call a structural deficit. This is the amount that over the longer term on average the council is in deficit. This is how much is at least required. There is a lot more work to be done to be fully sustainable. This does not deal with the backlog that has been created by under investment. This does not cover the underspend in maintenance.
To look at our roads we considered the length of the road network and how long the wearing surfaces will last. The average lives determine how much needs replacing each year and what that cost would be. One of the financial sustainability review recommendations is to develop a pavement management system. This will tell us how exactly to manage all the section of the road network. That work may change the amount required.
I have been told that everyone has told the Council they don’t want a rate increase, but the Council is not listening. Why won’t the Council listen to the community?
This is an easy claim to make. Unfortunately, it is not backed by evidence. The survey undertaken recently as part of the financial sustainability review received the following responses:
There are split feelings in the community on the issue.